Teacher Pensions Blog

Cassie Thompson is working toward balance. As a Head Start teacher in Cincinnati, Ohio, Cassie has strived to lead her 17 students, ages three to five years old, in both developmentally appropriate socio-emotional learning and academically rigorous kindergarten preparation.  Says Cassie, “It isn’t supposed to be just finger-painting and running around – but finding a consensus on what pre-k should be, even within Head Start, is difficult.”

Early childhood education is challenging and often thankless work. A recent, comprehensive report out of the Center for the Study of Child Care Employment at the University of California, Berkeley detailed the abysmal salaries, work environments, and professional development opportunities afforded to early educators nationwide. My Bellwether colleague, Marnie Kaplan, has more on this here, and the Department of Education released similar findings this June. 

But as state and local policymakers seek to expand pre-k opportunities and improve support for early childhood teachers, they must also ensure educators like Cassie are given a viable path to save for retirement. Perhaps unsurprisingly, many of the benefit inequities we see at the K-12 level trickle down to the early childhood sector as well. Here’s a quick breakdown:

The workforce is fragmented
Some pre-k teachers work in school districts, while others, like Cassie, are employed by community-based providers. This distinction alone means two early childhood teachers with identical qualifications could have dramatically different retirement benefits. Further, even those early childhood teachers who are eligible to enroll in a traditional teacher pension plan are still unlikely to benefit from the rewards promised – their tendency to be lower-paid and more mobile keeps them from reaping the back-end rewards of a state plan.  

The workforce is underpaid
Early childhood educators are often compensated at much lower levels than K-12 school teachers—even when they work in publicly funded programs such as Head Start and state-funded pre-k.  Pay is tightly linked to the ability to save for retirement. It isn’t that lower-paid workers are less cognizant of the need to save for their future, but rather, they simply have less money to save. We see this same scenario play out when analyzing women’s saving habits. While women are more likely to participate in retirement plans and contribute higher amounts, the average woman’s retirement account balance is half that of the average man’s. This isn’t because women are bad savers – in fact, they’re better – men just make more money and thus have more money left over to save.

In addition to differences in salary, lack of access to pensions and other retirement benefits available to K-12 teachers exacerbates salary inequities for early childhood workers. Although a growing number of policymakers, funders, and early childhood advocates recognize the need to improve the compensation of early childhood workers, retirement security issues are rarely included in these conversations.

This is unfortunate, because most early childhood workers lack retirement savings options altogether or have the option to join only meager, poorly structured 401(k) plans. Lack of access to employer-provided retirement plans is also a major area of inequity between preschool teachers working in public schools, who are enrolled in public pension plans, and those working in community-based organizations, who may not be enrolled in any retirement plan at all. The latter group is often made up of smaller providers, who face the same obstacles to providing benefits as other small companies. Here’s a bright spot: we’ve covered some of the state-based efforts to address this problem broadly; while there’s still work to be done on these, if enacted, pre-k teachers would be beneficiaries.  

But what about Cassie? Her non-profit employer offers a 403(b) retirement plan, giving her the portability to take her savings with her as she pursues a new opportunity outside of the classroom. The downside? Cassie’s employer does not match employee contributions unless they stay for several years – though Cassie was with her employer for two years, she won’t receive any match on her own contributions.

If Cassie is any example, increasing pre-k salaries is only the beginning. In order to enhance the status of the profession and build a more stable corps of educators who can seamlessly transition across sectors and locations, the early childhood sector needs to expand its reform efforts to include retirement offerings, too.